Stock markets bounce back on hopes P-Notes won’t be taxed
Mumbai, March 27
The Bombay Stock Exchange Sensex rose 1.2 percent on Tuesday, led by short covering ahead of expiry of the March derivatives series, after reports that the government would not target the so-called participatory notes in a blanket manner under its newly proposed rules targeting tax avoidance.

Investment panel for coal block auctions: Tata
New Delhi, March 27
Following reports of so called discrepancies in allotments of coal blocks, Tata Sons today clarified that the Investment Commission set up by the government had recommended that investment in coal mining in India should be enhanced through bidding for coal blocks and inducement of competition.

SBI allows existing home loan customers to switch to lower rates
Mumbai, March 27
In a move that would help a large number of home loan customers to reduce their interest burden, nation's largest lender State Bank of India has decided to allow them to reprice their existing loans at lower rates.
The switchover will be subject to a small fee — 1% of the outstanding loan amount, a top SBI official said.

Models pose beside a Lamborghini Gallardo LP 570-4 Super Trofeo Stradale during a media presentation of the 33rd Bangkok International Motor Show on Tuesday. Apart from checking out the latest production models and sales promotions, visitors will also get a glimpse of the future of automobiles through the large number of concept vehicles being displayed. The show will be held from March 28 to April 8.
(Left) and Workers prepare for window cleaning outside the 101st floor of the Shanghai World Financial Cente, currently the world’s second tallest building. Aiming to be a nerve centre of global financial services, the 492.0 meters (1,614.2 ft) skyscraper also contains the second highest hotel in the world. — Reuters

Tax-spared bonds face roadblocks
Mumbai, March 27
India's plan to double the issue of tax-spared bonds in the financial year beginning April to build highways and railroads is unlikely to find many takers because of a supply overhang and poor returns.

Indian IT firms seeking image makeover in US
Bangalore, March 27
Bangalore-based Mindtree became the latest Indian IT company to go for an image makeover in the United States by creating jobs there instead of being known simply as a third world dump for US firms shipping work overseas to take advantage of cheap labour.

Woodland eyes Chinese market
Chandigarh, March 27
Footwear and apparel maker Woodland plans to expand its presence in tier 2 and 3 cities and is also looking at entering the highly competitive Chinese market.

Govt to examine removal of excise levy on jewellery
Mumbai/ New Delhi, March 27
The government has agreed to examine jewellers demand for removal of excise duty levied on unbranded jewellery and come out with an "acceptable" solution, but won't reduce import duty on gold and platinum, Finance Minister Pranab Mukherjee told lawmakers on Tuesday.

Mumbai, March 27
The Bombay Stock Exchange Sensex rose 1.2 percent on Tuesday, led by short covering ahead of expiry of the March derivatives series, after reports that the government would not target the so-called participatory notes in a blanket manner under its newly proposed rules targeting tax avoidance.

Television channels, citing unnamed finance ministry officials, said that only participatory notes, or P-Notes, which fail certain regulatory tests may be subject to taxation.

There are still worries, however, that foreign investors would refrain from issuing fresh P-Notes on Indian stocks, pending further clarification from the government. "Conditions put up means taxmen can tax it, more clarification is still required to soothe FII nerves," said Sandeep J. Shah, CEO of Sampriti Capital.

P-Notes are issued by foreign portfolio investors registered with the Indian market regulator, or by their sub-accounts, to investors overseas and they offer the buyer anonymity.

Finance Minister Pranab Mukherjee in his budget presented on March 16 for the year starting on April 1 proposed to introduce the General Anti-Avoidance Rule in order to "counter aggressive tax avoidance schemes." He said it would be ensured it was used in appropriate cases.

The gains in the benchmark index were mainly supported by fast moving consumer goods and IT stocks on hopes of price hikes and better pricing power in the January-March quarter respectively.

New Delhi, March 27
Following reports of so called discrepancies in allotments of coal blocks, Tata Sons today clarified that the Investment Commission set up by the government had recommended that investment in coal mining in India should be enhanced through bidding for coal blocks and inducement of competition.

The three-member commission, comprising HDFC chairman Deepak Parekh, Ashok Ganguly and Tata Group chairman Ratan Tata, which worked from Dec 2004 to Dec 2009, had made about 1,400 recommendations on increasing investment in India for faster economic growth, through 16 key sectors in infrastructure, manufacturing, services and the knowledge economy.

Tata Sons in a statement clarified the commission’s proposals categorically were for bidding, more productive usage of coal blocks, and measures to prevent hoarding and to ensure competitive usage. The statement was in response to some reports about the panel’s role in recommending coal blocks.

In its report the panel had stated India should aim for US $15 billion investments by 2010 for coal mining. For this the commission made a composite set of recommendations which include carving out specified viable mining blocks from Coal India Ltd for captive exploitation. Alternatively, CIL subsidiaries should be encourage to induct strategic partners from leading mining firms.

It had also recommended that all mines closed by CIL should be offered to the private sector, in case there are viable recoverable reserves. It had recommended bidding by adapting the NELP model used for exploration of oil fields for private sector participation in coal mining by offering good quality coal blocks for bids.

The high level panel had also sought institution of a “use or lose” policy for all blocks, to prevent hoarding and ensure best competitive use, permit 50% FDI under the automatic route and permit merchant sale of coal by coal mines.

On the power sector, the commission recommended establishment of 25 to 30 sites for mega projects, for a total of 35,000 MW with an investment of over $30 billion through competitive bidding on tariffs.

Mumbai, March 27
In a move that would help a large number of home loan customers to reduce their interest burden, nation's largest lender State Bank of India has decided to allow them to reprice their existing loans at lower rates.

The switchover will be subject to a small fee — 1% of the outstanding loan amount, a top SBI official said. The move is expected to help all those borrowers whose home loans are linked to the prime lending rate which is as high as 14.75% at present.

Currently the floating rate of bank is linked to the base rate which is 10%. SBI's current floating rates vary from 10.5% for up to Rs 30 lakh loan, 10.75% for between Rs 30 lakh and Rs 75 lakh, and 11% for loans above Rs 75 lakh.

"We thought of giving an option to our existing home loan borrowers who are on the prime lending rate to switch over to the new floating rates that are much lower than our prime lending rates. Anybody can reprice their loan by paying a 1% of their outstanding as an upfront fee," SBI MD & chief financial officer Diwakar Gupta told PTI. He added there is no cap on the loan tenure or the amount of the loan to reprice their loan to a lower rate nor there is any time limit for the switchover.

SBI was prompted to take this measure in the wake of customers making enquires about shifting their loans to other banks, according to sources. The objective is to help the existing customers to lower their interest burden, which will in turn help the bank avoid possible delinquencies. — PTI

Mumbai, March 27
India's plan to double the issue of tax-spared bonds in the financial year beginning April to build highways and railroads is unlikely to find many takers because of a supply overhang and poor returns.

The government has set a target for such issues at Rs 600 billion by infrastructure finance companies in 2012/13, which would be used to bridge the shortfall in cash to fund large projects.

"There is an overhang of taxfree bonds in the market now so more supply will only be difficult to get absorbed," said Nirav Dalal, managing director and country head of fixed income and debt capital markets at YES Bank.

Poor market debut of Housing and Urban Development Corp's bonds after the budget in March is also expected to dampen investor demand. Indian Railway Finance Corp, on the other hand, listed with a wafer-thin premium of Rs 9 rupees per Rs 1,000 bond, disappointing traders.

The 15-year HUDCO bond is trading currently at Rs 960, 4% below its issue price of Rs 1,000, while IRFC bonds are also currently trading below their issue price.

"The doubling of the issuance quantity is going to act as a drag on the price of the taxfree bonds that have been issued so far," Dalal said.

A senior dealer with a foreign bank said excessive supplies could also push traders to more liquid government and corporate bonds.

The coupon rates on the tax-free bonds, set at up to 100 basis points lower than the annualized government bond yield at the end of the previous month for similar maturity, also shuts out many large investors, such as corporates.

REGULATORY BUMPS:
Companies are not allowed by law to invest in corporate bonds that pay less than the bank rate of 9.5%, while the yields on the taxfree bonds usually range from 8% to 8.50%. The bank rate was raised by 3.5 percentage points in February, bringing it at par with the marginal standing facility rate, the highest rate at which the central bank lends to banks.

"The inability of the corporates to buy because the coupon on taxfree bonds is lower than the bank rate will hit the demand for these bonds," Dalal said.

Bureaucratic red tape can also spook issue plans.

National Highways Authority of India, IRFC, IIFCL and the power sector can raise Rs 100 bn each, the finance minister said in the FY13 budget.

However, companies that have secured approvals to raise funds still need a government notification before they can offer taxfree bonds and this usually takes time.

In 2011-12, the notification was issued in September — six months into the fiscal —- leading to a clutter of deals hitting the market in a shorter span of time and some of the individual limits were not utilized, one company official said.

The market for taxfree bonds will now be limited to the super rich and retail investors, while insurance firms and mutual funds may stay off because they are not taxed on the interest income or coupon of the debt they buy. — Reuters

Bangalore, March 27
Bangalore-based Mindtree became the latest Indian IT company to go for an image makeover in the United States by creating jobs there instead of being known simply as a third world dump for US firms shipping work overseas to take advantage of cheap labour.

Mindtree announced Tuesday it was setting up its first major US development centre in Gainesville, Florida, which “is expected to bring some 400 new jobs to the area beginning late this summer”.

Mindtree followed in the footsteps of TCS in having the governor of the state welcome its arrival. Other Indian IT majors including Infosys and Wipro have also announced plans to double the locally hired workforce in the US to blunt President Obama’s tirade against outsourcing.

Chandigarh, March 27
Footwear and apparel maker Woodland plans to expand its presence in tier 2 and 3 cities and is also looking at entering the highly competitive Chinese market.

Woodland managing director Harkirat Singh told The Tribune the company proposed to open 60 stores in the coming fiscal, with more than half of them in smaller towns and cities, as compared to 50 in FY2011-12. “This year we’ve been clocking 30% growth in business and hope to clock a turnover of Rs 750 crore by March-end,” he added.

He stated Woodland is also set to start its retail business in China later this year. “We’re already working with some distributors in Hong Kong, the gateway to China”. He added the firm is ramping up production and has targeted 30% growth in the next fiscal.

Mumbai/ New Delhi, March 27
The government has agreed to examine jewellers demand for removal of excise duty levied on unbranded jewellery and come out with an "acceptable" solution, but won't reduce import duty on gold and platinum, Finance Minister Pranab Mukherjee told lawmakers on Tuesday.

"As there have been a lot of representations, I’m considering it (excise duty on unbranded jewellery). I’ll come out with an acceptable formulation," he said. — PTI